Industry Committee on June 10th, 2008

[The Chair, Conservative, James Rajotte]

I call to order the 45th meeting of the Standing Committee on Industry, Science and Technology pursuant to Standing Order 108(2), a continuation of our study of Canadian science and technology.

First of all, I apologize to the witnesses for the delay on the start of the committee, but we had a vote we had to attend to. We have four organizations with us here today.

From the Advanced Foods and Materials Network, we have the scientific director, Mr. Rickey Yada.

Secondly, from AUTO21, we have a witness who has appeared before us before, the CEO and scientific director, Mr. Peter Frise.

From the Juvenile Diabetes Research Foundation, we have two witnesses: the president and CEO, Mr. Andrew McKee; and a board member, Mr. Robert Hindle.

The fourth organization is Research Canada: An Alliance for Health Discovery. We have the president and CEO, Ms. Deborah Gordon-El-Bihbety; and the chair, Michael Julius.

We will have five minutes for each organization, and we'll present in that order.

We'll start with the Advanced Foods and Materials Network.

[Rickey Yada, Scientific Director, Advanced Foods and Materials Network]

Thank you, Mr. Chair.

Thank you to the members of this committee for allowing us to present some of the research we do as part of the networks of centres of excellence.

Just to remind members, the networks of centres of excellence is a program that is about 20 years old. It's a federally funded initiative supported by the tri-council funding agencies NSERC, CIHR, and SSHRC. Its mission is to mobilize Canada's research talent in the academic, private, and public sectors and apply it to developing the economy and improving the quality of life of Canadians. So as NCEs, we're charged with that onerous task.

The Advanced Foods and Materials Network is the only national network dealing with food and bio-materials. It is unique in the world, with a range of expertise ranging from food science, physics, and nutrition to ethics and consumer attitude. Our focus is really on food and health, and I'll be addressing that a little later.

Presently we're funded at a level of $5.4 million a year, and this represents research that we support at 25 universities with 75 researchers. One of our strongest applications is our students, and we train about 150 of them. We fund 25 multidisciplinary projects, and like all networks of centres of excellence, we're charged with leverage and doing complementary research based on active dialogue with industry and government to help us define the research agenda.

The network is one that turns challenges into opportunities, and hopefully in this brief presentation I'll talk about the challenges and opportunities we see as a network. I'm glad that my colleague Peter is here from AUTO21. I'm sure you'll hear similar messages.

As I indicated, we are charged with looking at food and health, so we feel that Canadians must be empowered to play a responsible role in their own health management. AFMNet supports research that is key to empowering our population, preserving health in Canada, and preventing an overwhelming health care demand by promoting preventative health care. I understand that members visited the St. Boniface facility and saw some of the research there on flax, so I won't reiterate that. But we look at such chronic diseases as type 2 diabetes and cardiovascular disease, which are in epidemic proportions these days. We're hoping to use food as a preventative means for keeping the health of Canadians at a good status.

One of the challenges in the research agenda is commercialization. As members may appreciate, taking something from the bench to a product or a technology is a challenge in an academic environment. We've worked closely here with industry and the government to identify the research agenda, but we've also supported our researchers in “proof of concept” funding.

In our discussions with industry, it's very difficult for industry to participate in anything that's pre-commercialization. We felt that as a network we needed to support this, and a really strong aspect of our network is that industry is able put their hands around some of the products and technology. Our role is really to get to enabling knowledge and technology. It also gives our students a real look at life in the commercial world and helps them transition into the real world.

We also have a challenge with the regulatory system in Canada, and it's not due to a lack of effort with our collaborators from the Canadian Public Health Institute, Health Canada, or Agriculture Canada. We're working closely with our colleagues in these agencies to identify the science and technology we need to improve our regulatory system. AFMNet provides a resource of expertise and knowledge regarding regulatory issues.

On communication, one of the challenges as an academic entity is translating science and research into language that the public and consumer can understand. We think we've made great gains here. In their packages before them, members have a copy of Advance magazine. It takes some of the stories and research we do as part of our network and puts it into language that the public and consumers can understand. It's been a wonderful thing because it has also allowed our students to be trained in science journalism. This magazine is produced wholly by students in the network. If it had been left up to professors, I don't think we would have come out with such a good product.

Finally, on training, we have a strong commitment to the training of our students. That ranges from undergraduate students all the way through to post-doctoral fellows. This is really the training of the next generation of scientists and regulators. We offer them a multidisciplinary training experience by moving them around the country in various disciplines. It's not unusual for a physics student or a food science student to spend time in an economics lab or an ethics lab.

[The Chair, Conservative, James Rajotte]

Mr. Yada, we're well over time, so I'd ask you to wrap up.

[Rickey Yada]

This allows our students to be market ready.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to Mr. Frise, please.

[Dr. Peter Frise, Chief Executive Officer and Scientific Director, AUTO21 Network of Centres of Excellence, Auto 21 Inc.]

Thank you very much.

I won't reiterate the mission of the NCE program, I'll just get right into it.

The challenges facing AUTO21 are the same as those facing Canada's automotive sector. We have to figure out how to maximize innovation within the available budget to keep our country competitive and keep people employed, and we have to figure out how to do this quickly enough to respond to very rapidly changing market forces and conditions.

To accomplish this goal, AUTO21 is working as hard as it can with its industry and NGO partners to address their research issues and provide them with the best possible human resources so that their businesses can make progress and create higher-value products as rapidly as possible to meet the needs of the global market. This is the mission of an NCE, and we're doing our best to accomplish it.

The need for innovation is very well known in Canada. One of the fundamental weaknesses of Canada's economy and overall economic picture is an under-investment in innovation by the private sector. In my view, one of the most important things that Canada's public sector can do is provide an environment in which private sector investments can make sense and can bring research to Canada.

The other thing that needs to be said is that this job will never be done, and the effort must be sustained. We have to determine what the most strategic sectors are for Canada and resolutely stick with them, because that's what the nations with which we compete are doing.

In my remarks today I'm going to describe how AUTO21 is contributing to the three thrusts of Canada's innovation strategy.

In terms of the knowledge advantage, we are providing support to 54 separate projects in our present program. These are all a reflection of the needs of the automotive sector for innovation in all areas of technology and practice. Our projects are chosen and judged against a set of priorities or vectors that drive product development in the auto industry around the world.

There is a need for continual progress on health and safety issues, so the first vector is safety.

There is the need for continual progress on reducing the energy footprint of the car, not just in its on-road use, but in its creation, manufacture, and disposal.

The next vector is the value vector, and that's a bit subtle. It's too easy, and it would be incorrect to say that Canada must decrease costs. We are simply not a low-cost country, and I don't think we really want to be, because that would imply a serious deterioration in our social fabric. We must strive for higher value--value being the ratio of performance divided by cost. We must continue to strive to lower cost, but we must increase the performance of our products so that they can command a premium in the market.

Finally, there is the need to improve the flexibility of our production environment in Canada. This goes for virtually all products that are made in Canada, beyond cars. The world is becoming a very fragmented market. Any given production asset must be as flexible as possible so that it can produce as wide a range of products as possible and change quickly from one to the other to respond to market forces.

Just to give you an example, 10 or 15 years ago there were between 80 and 100 car models on the market. Now there are around 400 car models on the market, and sales have not grown very much at all. The number of cars of an individual type that are being sold has shrunk from 300,000 or 400,000 units per vehicle to 40,000 to 80,000 units per vehicle. That means we need to develop new kinds of materials, new production processes, and new design methodologies so that we can create desirable products more rapidly at lower cost and then tool them up in our factories at lower cost so that we can remain profitable with smaller production runs.

This industry-led, needs-driven, flexible, and agile approach is what has made AUTO21 such a success--and this view doesn't come entirely from within Canada. Our international scientific advisory committee has said that AUTO21 is an exemplar of how to initiate, facilitate, manage, and coordinate a very large multidisciplinary research network that brings academics together with industrialists and high-impact partnerships. This, we feel, is a very important aspect of the network, and we applaud our international scientific advisory committee for that view. We thank them very much for it as well.

I'd just like to close with a few words on how Canada can improve its performance. I think the key thing is to provide a balance between curiosity-driven research and needs-driven research. The NCEs provide that key balance, and I think it's important that they be supported and be as strong a set of organizations as possible.

I can give you some statistics. AUTO21 is funded at $5.8 million per year. We leverage around $6 million per year from the auto industry. That is a strong ratio, in my view, especially given the times in the auto industry. Currently we have 315 researchers at 43 universities. At this time we are training nearly 500 students. We have completed the training of around 1,200 students in the past. The number of industrial partners we work with is more than 240.

Thank you very much.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Frise.

We'll go now to Mr. McKee.

[Andrew McKee, President and Chief Executive Officer, Juvenile Diabetes Research Foundation]

Mr. Chair, members of the committee, on behalf of the Juvenile Diabetes Research Foundation I want to thank you for the opportunity to speak to you as part of the consultation on the importance of science and technology in Canada. JDRF commends you for embarking on this timely study.

I'm particularly pleased to speak to you as part of the study theme of partnerships and networks, as JDRF is trying to establish a clinical trial network for type 1 diabetes that would inspire scientific innovation across a Canada-wide platform. The clinical trial network would be formed through a partnership with the Canadian Institutes of Health Research.

Given our history of research excellence, JDRF is uniquely positioned to comment on the importance of partnerships and how they can advance Canadian health science. We are recommending that the Government of Canada fund a 10-year strategic partnership between JDRF and the CIHR. The funding partnership would be phased in over five years, with the objective of creating a CIHR clinical trial network with JDRF as its first project.

I would note that JDRF's research management policies are founded on a sound business model that brings with it expertise not available elsewhere in the world. The business model calls for regular evaluations, and there is a detailed proposal that will show a tangible and measurable return on investment for the Government of Canada.

Clinical trial network is a well-known phrase used to describe a wider spectrum in which research moves from basic discovery stage to commercialization of a therapy. This network will attract and retain world-class researchers to Canada and will also advance the research at Canadian hospitals and universities as it will entice institutions to partner with JDRF and CIHR to leverage government investments.

JDRF is the lead charitable funder and advocate of type 1 diabetes research worldwide. This year JDRF surpassed the United States government in diabetes funding. The mission of JDRF is simple: to find a cure for diabetes and its complications through the support of research.

Type 1 diabetes is an autoimmune disease that is the most severe form of diabetes, striking infants, children, and young adults, and leaving them dependent on insulin for life. This is different from type 2 diabetes, commonly known as adult onset, because it develops later in life and can often be controlled through diet and exercise.

Partnerships are a key component of JDRF's approach to research. Based on a basic research discovery by JDRF-funded scientists, JDRF in September 2006 partnered with Transition Therapeutics Inc. to develop a beta cell regeneration product. In November 2007, JDRF entered into its first pharmaceutical partnership with Eli Lilly and Company, whereby Eli Lilly partnered to fund research to identify beta cell biomarkers. In March 2008, JDRF announced the new partnership that it had brokered to pursue to commercialization of the drug called gastrin among JDRF, Transition Therapeutics, and Eli Lilly.

This deal represents the largest pharmaceutical investment in Canada in diabetes commercialized scientific research for which the research and development intellectual property rights actually remain in Canada. The partnership among JDRF, Transition Therapeutics, and Eli Lilly is a clear and concrete example of what would constitute a measurable return on investment by government.

One of Canada's great research strengths is in the area of diabetes. Whether it is the discovery of insulin almost 90 years ago or the Edmonton Protocol in 2000, Canadian researchers have been world leaders in fighting this disease. Diabetes research is a proven winner and a cornerstone of Canadian research excellence.

We are not requesting direct government funding. Rather, we seek to partner with the government and combine our expertise to advance scientific research. We recently negotiated an agreement in principle between JDRF and CIHR to create a clinical trial network for type 1 diabetes. This partnership would promote world-class research excellence in the area of type 1 diabetes, focus on children's health, and make improving the lives of Canadian youth a priority.

It will require government investment, and we will be seeking a recommendation from this committee to that effect. There is considerable support within the government for the clinical trial network we are trying to create. General recommendation three in the finance committee's 2008 pre-budget report states:

The federal government create a specialized fund for medical research for children's health. In this regard priority should be given to the establishment of a partnership with the Juvenile Diabetes Research Foundation of Canada.

Additionally, the report Reach for the Top: A Report by the Advisor on Healthy Children & Youth by Dr. Kellie Leitch made recommendations related to children and diabetes. JDRF applauds these recommendations and continues to identify areas of synergy with the federal government.

While governments can do a lot, they cannot do everything. Given the demands on government budgets, it is increasingly important to partner with private sector companies and non-profit organizations that can provide the finances, resources, and expertise needed to undertake research that will improve Canadian lives.

At JDRF, we believe in strategic partnerships as a means of leveraging the best of public and private sector worlds. We have included the details of the proposed partnership with CIHR as well as our request of the government in a brief that was submitted to this committee. Therefore, I will not take the time to go over that information now. However, the proposed partnership between JDRF and CIHR conforms to the Government of Canada's science and technology strategy, which encourages partnerships. In fact, the proposal is consistent with all four principles of the science and technology strategy: promoting world-class research, focusing on priorities, encouraging partnership, and enhancing accountability.

Type 1 diabetes is one of the most devastating chronic diseases that impact children and youth. Research is the only avenue for addressing this disease. We therefore respectfully request the Standing Committee on Industry, Science and Technology support the proposed partnership between JDRF and CIHR, and the creation of a clinical trial network for type 1 diabetes research.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. McKee.

Who will be presenting for Research Canada? Mr. Julius.

[Michael Julius, Chair, Research Canada: An Alliance for Health Discovery]

Thank you very much, Mr. Chair and members of the committee.

My name is Michael Julius. I'm the chair of Research Canada and vice-president of research for Sunnybrook Health Sciences Centre in Toronto, Ontario. It's a pleasure for Deborah Gordon-El-Bihbety, president and CEO of Research Canada, and me to be here with you today.

I'll begin with a few words about Research Canada. We're an alliance for health discovery, which is a national not-for-profit voluntary organization whose members are dedicated to advancing health research in Canada and ensuring that Canadian health innovation achieves its fullest potential on the global stage.

We represent a broad base of stakeholders in this arena: research hospitals; universities; health charities; regional health authorities; professional associations; and possibly most importantly, industry. As such, we play a unique and necessary role within the Canadian health research endeavour. We are a unified voice speaking on behalf of a broad base of stakeholder organizations delivering a common message to you folks, our government.

Our philosophy is simple. Health research is a shared benefit and a shared responsibility. All Canadians are its stewards; therefore, we serve all Canadians in our efforts to improve their health and prosperity by making Canada a global leader in health research.

Research Canada has applauded the launch of this government's science and technology strategy. It provides a rational foundation that contemplates a well-aligned, systems-based approach to strengthening Canada's knowledge-based economy through innovation and commercialization.

The strategy recognizes that Canada's system of innovation is one--

[The Chair, Conservative, James Rajotte]

I'm sorry, Mr. Julius, this is being translated at the same time. Could we have you slow down?

[Michael Julius]

Our chair is so draconian. I'm sensing the hook coming from the front of the table in a moment.

We're a system out of balance and failing to capitalize on the innovation advantage afforded by federal investments in world-class research, people, and facilities. Indeed, these investments have been material, and we have not capitalized on their fruits. Our system of innovation is not integrated. We're cherry-picking; we're picking pieces, as opposed to supporting the continuum of innovation from creative impulse and response to a market need to delivery of product.

Here are some cases in point: how did we respond to SARS, and how are we going to respond to the next scourge? In fact, this virus was first sequenced in Canada; we dropped the ball. Canada was not prepared to capitalize on the products of the human genome project; we're playing catch-up. Could Canada, in the absence of an integrated approach, support the development of the next Silicon Valley?

Our submission to this committee represents the culmination of an extensive national consultation and response to the four major themes outlined in this committee's study on Canadian science and technology. We propose a model of an integrated, functional innovation system, a framework providing a road map for strategic investment, one that will enable us to capitalize on our health research investments. The model considers the full breadth of function of an innovation system, highlighting the key success factors that enable the translation of discovery and concepts into health and economic impact.

Fundamental to its success is achieving a critical balance of activity within each stage and among the stages of the innovation cycle. Put simply, while rooted in the market, the success of a functional innovation system is underpinned by the government's commitment to support excellence in knowledge creation, effective vehicles for knowledge translation, mitigation of risks assumed by private sector investment in R and D, and the creation of the appropriate policies and policy frameworks that ensure new technologies are made available to Canadians and, indeed, the world.

The model traces the trajectory of activities from creative impulse and discovery through to delivery of product. At its core, the model is predicated on the balance between the push of knowledge creation and the fostering of an environment that enables the pull of innovation to application, whether it be, importantly, not only a new product or widget but also an improved medical practice or a health system policy reform. Each stage of the cycle is defined by specific prerequisites for push-pull balance and by discrete metrics enabling measurement of success.

As well, as we highlight in the model, it contemplates the complementary contributions of each of the stakeholders involved in this enterprise--what we call the GAIN spectrum of government, which is academia, industry, and the non-governmental organizations or private sector--and further, how the contributions from each of the members of the GAIN spectrum differ throughout the innovation cycle.

A work in progress, the goal of the model is the provision of a framework that will guide strategic long-term investments and, through this investment road map, provide a dynamic policy instrument that can be adapted to the full continuum of Canadian innovation. It is a long-term vision, one that could position Canada as a global leader in science and technology. Our innovation system, while chugging along, has predominantly failed to provide the results that you need and that the country demands.

Therefore, on behalf of Research Canada, we make the following two recommendations to this body: that the Government of Canada implement a systemic approach to Canadian innovation through the adoption of a comprehensive, integrated framework that supports the key success factors enabling the translation of discovery into health and economic impact, and that it do so in collaboration with all stakeholders--academic, voluntary, the private sector, and of course the provincial governments.

As a country, we can make a quantum advance in the understanding, design, and execution of an innovation system, one that will surely result in the flexibility to meet new opportunities and one that will deliver increased international competitiveness.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll go to questions from members.

Go ahead, Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Thank you, Mr. Chair.

I thank all the witnesses for being here.

Perhaps I'll begin with you, Mr. Julius. We have seen a brief you submitted to the committee back in April. We thank you for that. In that brief you mentioned that you are comparing best practices with those of a host of other nations, including the United States. I'm wondering if you have any particular perspectives from what you've learned from this inquiry or investigation or comparison that you've undertaken.

[Michael Julius]

That, of course, is an excellent question. And just to manage your expectations, the model is contemplating doing precisely that exercise. That exercise has not been completed.

The model right now is a descriptive model, and our goal is to make it a prescriptive model—and it is precisely that research that needs to be done. So we're not quite there yet, but the goal is first to create a catalogue within Canada of all the funding agencies that are supporting the health research agenda and to understand how they interact one with another and, then, throughout the discovery and execution continuum all the way to delivery of product.

We already appreciate that other countries across the globe have entered the cycle, as we've described it, at very different points and have had some enormous success in various quadrants. For example, Ireland has focused mainly on quadrant numbers two and three in the cycle and has dedicated itself to becoming the country that facilitates the production and execution of industrial findings provided to the globe. They have been extraordinarily successful in transforming their economy, and with that transformation came the economic rewards; and those economic rewards, interestingly, are now being applied to making that cycle full. So they're now starting to invest, if you will, in the discovery side and, eventually, in the policy side as well.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

If I could turn to you, Mr. Frise, there's certainly a perception that Canada is not at the head or lead, and doesn't even find itself somewhere in the middle, as far as industrial research and development are concerned in OECD countries. I'm wondering if you could explain to us why that is the case.

[Dr. Peter Frise]

Well, I think there are a number of reasons. One is that Canada's industry does not have the scale of many of the other larger countries. But that argument begins to fall apart when you start looking at a country like Sweden, for instance, which is a much smaller country than Canada, and yet Swedish companies typically invest much more heavily in research and development than ours do.

From my experience travelling around the world and talking to colleagues in other countries, I think it's really the environment in which research is done in those other countries. The companies that work there perceive doing research as a high-value activity, and they use the public sector resources, the universities, to leverage their own resources and their own efforts. I think that Canada perhaps has a history of starting and stopping things too quickly before they can really take root well enough. I think we sometimes don't set our priorities and stick with them. So I think there are quite a number of factors that have contributed to this.

I'm always reminded of the president of a large Canadian auto parts company, who said in a CAPC meeting one day that his company had an R and D budget of about $24 million a year and that much of it was spent in Germany because the German institutions could get things done.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I thank you for that, Dr. Frise.

Perhaps I could turn to you, Mr. McKee. You suggested in your submission that you're looking for a government investment. Apart from how many research facilities you have—with McGill and Alberta, etc.—I'm wondering what you would envision that investment to be. Could you categorize for us what kind of funding you're seeking from the federal government? We're somewhat familiar with this, but I think it would be better to put on the record here now.

[Andrew McKee]

Absolutely, I'd be delighted to do that.

In our current ask for the 10-year partnership agreement that we've signed with CIHR, we're asking that funding to the tune of $125 million be provided to the CIHR, dedicated to the clinical trials network. In turn, JDRF is going to match that funding with $50 million of our money over the first five years. So it would be an average of a $25 million investment a year over five years, matched by $10 million a year by JDRF.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Assuming funding comes forward and research is done, do you have much control over the outcome of the publication of the results of any research that might emanate from this investment or partnership—both your own and the one you're anticipating from doing to a greater extent with the government?

[Andrew McKee]

Absolutely, the very model on which JDRF was founded and the business approach we take towards research set hurdles and benchmarks that have to be attained by all our researchers through the research exercise. So we set those milestones right at the inception. If at any point those are not met, then funding ceases at that point in time. So it encourages a constant iterative process to ensure that progress is being made and that results are being achieved.

In fact, when CIHR was founded, they copied the JDRF research funding model in doing that very thing.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

How many student scientists do you have working in your research centres in Alberta and Montreal right now?

[Andrew McKee]

At present, I don't know the exact number off the top of my head, but there are over 40 JDRF-funded researchers today in Canada.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Are they clinical or basic?

[Andrew McKee]

Right now the vast majority of those are basic funded researchers. We do have several clinical trials running in Canada right now, and as part of broader global clinical trials, there are a number of Canadian researchers participating in those as well.